As noted, a key aspect of a healthy insurance industry is
the ability to correctly forecast the probability of an accident as well as the
loss associated with an accident. Eliminating the requirement for purchasing
unlimited PIP coverage will allow insurance companies to better estimate the
loss from an accident. In addition, insurance companies should be allowed to
use the best models available for estimating the probability of an accident.

The Michigan legislature should not restrict the ability of companies
to use the risk-management and underwriting tools they choose. There are more
than 100 insurance companies competing for business in Michigan.[10] They have
every incentive to use those variables that are most likely to predict the
chance of an accident. Using variables that are not accurate will result in
underwriting losses that will drive the company out of business. It is not
possible for a legislative body to know which variables will be successful and
which are not, and it has no incentive to get it right.

If lawmakers are concerned about the cost of premiums for
certain subsets of the population, particularly low-income persons, they should
not attempt to create an artificial subsidy for all drivers by restricting the
ability of insurers to properly price premiums, and instead focus only on how
to bring down premiums for that particular subset of the population.